Competitive Tendering Costs Drop in Denver:
1999 Tender Results

In 1989, Denver's Regional Transportation District (RTD) was required by state Senate Bill #164 to competitively tender 20 percent of its bus service. On December 16, 1998, the third round of competitive tendering was completed, with the award of new five year contracts to TCT Services and Laidlaw Transit. TCT will provide more than 70 percent of the service. All of the service was previously provided by Laidlaw Transit.

• RTD calculates that the competitively tendered service will save 29 percent over the contract term compared to the cost of delivering the service internally.⁽¹⁾
  
  

• When combined with other service tendered two years ago, under the Senat Bill #164 mandate, RTD's competitively tendered services will save 32 percent over the next two years.⁽²⁾ (A longer analysis is not possible because the 1996 contract expires in three years).

In 1996, and RTD sponsored management report projected RTD savings due to competitive tendering at $88 million for the first ten years (through contracts expiring in 1999). The new savings will increase this amount to approximately $140 million through 2003.⁽³⁾

The 1999-2002 cost will be approximately 15 percent below the competitive operating cost per service hour in 1996-7, the year before the 1996 one-third service reprocurement.

The lower costs in the last two procurements are attributable to RTD initiatives to improve competition. In the previous procurement (1994), only incumbent operators submitted proposals. In 1996, two non-incumbents submitted, while in 1998 five non-incumbents submitted proposals. The RTD initiatives were consistent with recommendations in the 1995 management report.

1. RTD analysis, 16 December 1998.

2. RTD analysis, 19 December 1996.

3. The contract awarded in 1996 reduced projected competitively tendered costs for one-third of the service by approximately 20 percent. This assumes that the reprocurement of the 1996 contract will result in rates similar to those bid in the 1998 contracts for the same year.